What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-03 compared with 2022-11-02 · 259 added, 361 removed, 345 unchanged (64% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

CURRENT ASSETS

2 unchanged sentences

Other tax receivable

Prepaid expenses

Prepaid expenses and other current assets

Prepaid expenses – related party

17 unchanged sentences

Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding

Common stock, $ 0.001 par value, 200,000,000 shares authorized, 17,945,995 and 17,843,303 shares issued and outstanding, respectively

Common stock, $ 0.001 par value, 200,000,000 shares authorized, 17,945,995 shares issued and outstanding

Additional paid-in capital

Accumulated other comprehensive (loss) income

Accumulated other comprehensive loss

Accumulated deficit

1 unchanged sentence

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements.

INMUNE BIO INC.

2 unchanged sentences

(In thousands, except share and per share amounts)

For the Three Months Ended

September 30,

For the Nine Months Ended

September 30,

Three months ended

OPERATING EXPENSES

3 unchanged sentences

LOSS FROM OPERATIONS

OTHER EXPENSE

Other expense, net

Total other expense, net

Net loss per common share – basic and diluted

Weighted average common shares outstanding - basic and diluted

Weighted average number of common shares outstanding – basic and diluted

COMPREHENSIVE LOSS

Other comprehensive loss - foreign currency translation

Other comprehensive (loss) income – foreign currency

Total comprehensive loss

2 unchanged sentences

INMUNE BIO INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

(In thousands, except share amounts)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance as of December 31, 2022

Issuance of common stock for cash

Exercise of warrants for cash

Stock-based compensation

Gain on foreign currency translation

Balance as of March 31, 2022

Stock-based compensation

Loss on foreign currency translation

Balance as of June 30, 2022

Stock-based compensation

Loss on foreign currency translation

Balance as of September 30, 2022

Balance as of March 31, 2023

The accompanying

notes are an integral part of these unaudited condensed consolidated financial statements.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES

IN STOCKHOLDERS’ EQUITY

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’

(In thousands, except share amounts)

1 unchanged sentence

Stockholders’

Income (Loss)

Balance as of December 31, 2021

4 unchanged sentences

Balance as of March 31, 2022

Stock-based compensation

Settlement of Xencor warrant for cash and common stock

Warrants issued to lenders as debt inducement

Loss on foreign currency translation

Balance as of June 30, 2021

Issuance of common stock for cash

Cashless exercise of warrants

Exercise of stock options

Stock-based compensation

Loss on foreign currency translation

Balance as of September 30, 2021

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements.

INMUNE BIO INC.

1 unchanged sentence

(In thousands)

For the Nine Months Ended

September 30,

For the Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES:

2 unchanged sentences

Accretion of debt discount

Impairment of operating lease – right of use asset

Changes in operating assets and liabilities:

9 unchanged sentences

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES

Cash paid to Xencor to settle warrant for acquired research and development intangible assets

Net cash used in investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Net proceeds from sale of common stock

Net proceeds from exercise of stock options

Net proceeds from the exercise of warrants

Net proceeds from the issuance of debt

Net cash provided by financing activities

Impact on cash from foreign currency translation

NET (DECREASE) INCREASE IN CASH

NET DECREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

3 unchanged sentences

Cash paid for interest expense

NONCASH INVESTING AND FINANCING ACTIVITIES:

Common stock issued to Xencor to settle warrant issued for acquired research and development intangible assets

Warrants issued as debt inducement

The accompanying notes are an integral part of

these unaudited condensed consolidated financial statements.

The accompanying notes are an integral part of these

unaudited condensed consolidated financial statements.

INMUNE BIO INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED

FINANCIAL STATEMENTS

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL

NOTE 1 – ORGANIZATION AND DESCRIPTION

INmune Bio Inc.

(the “Company” or

“INmune Bio”) was organized in the State of Nevada on September 25, 2015, and is a clinical stage biotechnology pharmaceutical

company focused on developing and commercializing its product candidates to treat diseases where the innate immune system is not functioning

normally and contributing to the patient’s disease.

(the “Company” or “INmune

Bio”) was organized in the State of Nevada on September 25, 2015 and is a clinical stage biotechnology pharmaceutical company focused

on developing and commercializing its product candidates to treat diseases where the innate immune system is not functioning normally

and contributing to the patient’s disease.

INmune Bio has two product platforms.

The DN-TNF product platform (XPro1595,

XPro™, pegipanermin ) utilizes dominant-negative technology to selectively neutralize soluble TNF, a key driver of innate

immune dysfunction and mechanistic target of many diseases.

DN-TNF is currently being developed for Alzheimer’s and treatment resistant

depression (XPro™) and cancer (INB03).

The Natural Killer Cell Priming Platform includes INKmune™ aimed at priming the patient’s

NK cells to eliminate minimal residual disease in patients with cancer.

INmune Bio’s product platforms utilize a precision medicine

approach for the treatment of a wide variety of hematologic malignancies, solid tumors and chronic inflammation.

The DN-TNF product platform utilizes dominant-negative

technology to selectively neutralize soluble TNF, a key driver of innate immune dysfunction and mechanistic target of many diseases.

is currently being developed for Alzheimer’s and treatment resistant depression (“XPro”) and cancer (“INB03”)

and an out-licensing strategy for Duchenne’s Muscular Dystrophy (“DMD”).

The Natural Killer Cell Priming Platform includes

INKmune aimed at priming the patient’s NK cells to eliminate minimal residual disease in patients with cancer.

product platforms utilize a precision medicine approach for the treatment of a wide variety of hematologic malignancies, solid tumors

and chronic inflammation.

NOTE 2 – LIQUIDITY

As of September 30, 2022, the Company had an accumulated

As of March 31, 2023, the Company had an accumulated

deficit of $ 97,550,000 and experienced losses since its inception.

The Company had cash, cash equivalents of $ 57,405,000 as of September

The Company had cash, cash equivalents of $ 51,003,000 as of March 31,

2023, and has not generated positive cash flows from operations.

To date, the Company has funded its operations primarily through the

sale of its common stock.

Although it is difficult to predict the Company’s liquidity requirements, as of September 30, 2022, and

based upon the Company’s current operating plan, the Company believes that it will have sufficient cash to meet its projected operating

requirements for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of cash

available as of September 30, 2022.

Management expects operating losses to continue

for the foreseeable future.

There can be no assurance that the Company will ever earn revenues or achieve profitability, or if achieved,

that they will be sustained on a continuing basis.

In addition, the manufacturing, clinical and preclinical development activities as

well as the commercialization of the Company’s products, if approved, will require significant additional financing.

may be unable to secure such financing when needed, or if available, such financings may be under terms that are unfavorable to the Company

To date, the Company has funded its operations primarily through the sale

of its common stock.

Although it is difficult to predict the Company’s liquidity requirements, as of March 31, 2023, and based upon

the Company’s current operating plan, the Company believes that it will have sufficient cash to meet its projected operating requirements

for at least the next 12 months following the filing date of this Quarterly Report on Form 10-Q based on the balance of cash available

as of March 31, 2023.

Management expects operating losses to continue for

the foreseeable future.

There can be no assurance that the Company will ever earn revenues or achieve profitability, or if achieved, that

they will be sustained on a continuing basis.

In addition, the manufacturing, clinical and preclinical development activities as well

as the commercialization of the Company’s products, if approved, will require significant additional financing.

The Company may

be unable to secure such financing when needed, or if available, such financings may be under terms that are unfavorable to the Company

or the current stockholders.

1 unchanged sentence

of, or eliminate development programs, which may adversely affect its business and operations.

NOTE 3 – SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING

of Presentation

The accompanying financial statements are presented

dollars and have been prepared in accordance with accounting principles generally accepted in the United States of America (“US

GAAP”), and pursuant to the accounting and disclosure rules and regulations of the U.S.

The accompanying financial statements are presented in U.S.

dollars and have been prepared in accordance with accounting principles generally

accepted in the United States of America (“US GAAP”), and pursuant to the accounting and disclosure rules and regulations

Securities and Exchange Commission (“SEC”).

The consolidated financial statements include the accounts of INmune Bio, Inc.

The consolidated financial statements include the accounts of INmune

and its subsidiaries.

Intercompany transactions and balances

have been eliminated.

Intercompany transactions and balances have been eliminated.

In the opinion

10 unchanged sentences

Also, economies worldwide have also been negatively impacted by the COVID-19 pandemic, however policymakers

around the globe have responded with fiscal policy actions to support the healthcare industry and economy as a whole.

around the globe have responded with fiscal policy actions to support the healthcare industry and economy.

The magnitude and

overall effectiveness of these actions remain uncertain.

In addition, the Company’s clinical trials

have been affected by and may continue to be affected by the COVID-19 pandemic.

Clinical site initiation and patient enrollment have and

may continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic.

Some patients have not and others

may not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

In addition, the Company’s clinical trials have

been affected by and may continue to be affected by the COVID-19 pandemic.

Clinical site initiation and patient enrollment have and may

continue to be delayed due to prioritization of hospital resources toward the COVID-19 pandemic.

Some patients have not, and others may

not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.

the ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened

1 unchanged sentence

The severity of the impact of the COVID-19 pandemic

on the Company’s business will depend on a number of factors, including, but not limited to, the duration and severity of the pandemic

on the Company’s business will depend on several factors, including, but not limited to, the duration and severity of the pandemic

and the extent and severity of the impact on the Company’s service providers, suppliers, contract research organizations (“CROs”)

15 unchanged sentences

are based on inputs not quoted on active markets but corroborated by market data.

Unobservable inputs are

used when little or no market data is available.

Assets and liabilities are classified based on

the lowest level of input that is significant to the fair value measurements.

Unobservable inputs are used

when little or no market data is available.

Assets and liabilities are classified based on the

lowest level of input that is significant to the fair value measurements.

The Company reviews the fair value hierarchy classification

4 unchanged sentences

the fair value measurement hierarchy during the years presented.

The carrying amounts of financial instruments

such as cash and cash equivalents, research and development tax credit receivable, other receivable, prepaid expenses, and accounts payable

The carrying amounts of financial instruments such

as cash and cash equivalents, research and development tax credit receivable, other receivable, prepaid expenses, and accounts payable

and accrued liabilities approximate the related fair values due to the short-term maturities of these instruments.

38 unchanged sentences

Basic and Diluted Loss per Share

Basic loss per share is computed by dividing net

loss available to common shareholders by the weighted average number of outstanding common shares during the period.

Diluted loss per

share gives effect to all dilutive potential common shares outstanding during the period.

Dilutive loss per share excludes all potential

common shares if their effect is anti-dilutive.

For all periods presented, there is no difference in the number of shares used to calculate

basic and diluted shares outstanding due to the Company’s net loss position.

At September 30, 2022 and 2021, the Company had

potentially issuable shares as follows:

September 30,

Basic loss per share is computed by dividing net loss

available to common shareholders by the weighted average number of outstanding common shares during the period.

Diluted loss per share

gives effect to all dilutive potential common shares outstanding during the period.

Dilutive loss per share excludes all potential common

shares if their effect is anti-dilutive.

For all periods presented, there is no difference in the number of shares used to calculate basic

and diluted shares outstanding due to the Company’s net loss position.

At March 31, 2023 and 2022, the Company had potentially

issuable shares as follows:

Stock options

Revenue Recognition

The Company recognizes revenue when the customer

obtains control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange

for those goods or services.

The Company recognizes revenue when the customer obtains

control of promised goods or services, in an amount that reflects the consideration the Company expects to receive in exchange for those

goods or services.

The Company recognizes revenue following the five-step model prescribed under ASC Topic 606:

contract(s) with a customer;

(1) identify contract(s)

with a customer;

(2) identify the performance obligations in the contract;

(3) determine the transaction price;

the transaction price to the performance obligations in the contract;

and (5) recognize revenues when (or as) the Company satisfies the

performance obligations.

The Company records the expenses related to revenue in research and development expense, in the periods such

expenses were incurred.

The Company records deferred revenues when cash

payments are received or due in advance of performance, including amounts which are refundable.

(4) allocate the transaction

price to the performance obligations in the contract;

and (5) recognize revenues when (or as) the Company satisfies the performance obligations.

The Company records the expenses related to revenue in research and development expense, in the periods such expenses were incurred.

The Company records deferred revenues when cash payments

are received or due in advance of performance, including amounts which are refundable.

Stock-Based Compensation

12 unchanged sentences

Research and Development

Research and development (“R&D”)

costs are expensed as incurred.

Research and development credits are recorded by the Company as a reduction of research and development

Research and development (“R&D”) costs

are expensed as incurred.

Research and development credits are recorded by the Company as a reduction of research and development costs.

Major components of research and development costs include cash compensation, stock-based compensation, costs of preclinical studies,

21 unchanged sentences

In June 2016, the FASB issued ASU No.

2016-13, Financial

Instruments—Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as clarified in subsequent amendments.

ASU 2016-13 changes the impairment model for certain financial instruments.

The new model is a forward-looking expected loss model and

will apply to financial assets subject to credit losses and measured at amortized cost and certain off-balance sheet credit exposures.

This includes loans, held-to-maturity debt securities, loan commitments, financial guarantees and net investments in leases, as well as

trade receivables.

For available-for-sale debt securities with unrealized losses, credit losses will be measured in a manner similar to

today, except that the losses will be recognized as allowances rather than reductions in the amortized cost of the securities.

2019, the FASB voted to delay the effective date of this standard.

2016-13, Financial Instruments—Credit

Losses (Topic 326), Measurement of Credit Losses on Financial Instruments, as clarified in subsequent amendments.

ASU 2016-13 changes

the impairment model for certain financial instruments.

The new model is a forward-looking expected loss model and will apply to financial

assets subject to credit losses and measured at amortized cost and certain off-balance sheet credit exposures.

This includes loans, held-to-maturity

debt securities, loan commitments, financial guarantees and net investments in leases, as well as trade receivables.

For available-for-sale

debt securities with unrealized losses, credit losses will be measured in a manner similar to today, except that the losses will be recognized

as allowances rather than reductions in the amortized cost of the securities.

In October 2019, the FASB voted to delay the effective date

of this standard.

Topic 326 will be effective for the Company on January 1, 2023.

adoption is permitted.

The Company is currently assessing the effect that this ASU will have on its condensed financial position,

results of operations, and disclosures.

Adoption of the ASU is on a modified retrospective basis.

The Company adopted ASU 2013-13 on January 1, 2023, and the adoption of the ASU did not impact the Company’s financial position,

results of operations, cash flows or net loss per share.

Subsequent Events

evaluates events that have occurred after the balance sheet date of September 30, 2022, through the date which the financial statements

evaluates events that have occurred after the balance sheet date of March 31, 2023, through the date which the financial statements are

NOTE 4 – RESEARCH AND DEVELOPMENT

According to UK tax law, the Company is

allowed an R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to certain

requirements.

The Company’s UK subsidiary submits R&D tax credit requests annually for research and development expenses

At September 30, 2022 and December 31, 2021, the Company recorded a research and development tax credit receivable in the

amount of $ 2,566,000 and $ 3,319,000 , respectively.

The reduction in the research and development tax credit receivable is primarily

due to a stronger US dollar.

During the nine months ended September 30, 2022 and 2021, the Company received $ 0 of R&D tax credit

reimbursements from the UK.

According to AUS tax law, the Company is allowed

an R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements.

The Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

At September 30, 2022 and December 31, 2021, the Company recorded a research and development tax credit receivable of $ 1,851,000 and $ 1,594,000 ,

According to UK tax law, the Company is allowed an

R&D tax credit that reduces a company’s tax bill in the UK for expenses incurred in R&D subject to certain requirements.

The Company’s UK subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

31, 2023 and December 31, 2022, the Company recorded a research and development tax credit receivable in the amount of $ 0 and $ 2,690,000 ,

respectively.

During the three months ended March 31, 2023 and 2022, the Company received $ 2,710,000 and $ 0 , respectively, of R&D

tax credit reimbursements from the UK.

According to AUS tax law, the Company is allowed an

R&D tax credit that reduces a company’s tax bill in AUS for expenses incurred in R&D subject to certain requirements.

Company’s Australian subsidiary submits R&D tax credit requests annually for research and development expenses incurred.

March 31, 2023 and December 31, 2022, the Company recorded a research and development tax credit receivable of $ 1,814,000 and $ 5,409,000 ,

respectively, for R&D expenses incurred in Australia.

During the nine months ended September 30, 2022 and 2021, the Company received

$ 0 R&D tax credit reimbursements from Australia.

During the three months ended March 31, 2023 and 2022, the Company received

$ 3,763,000 and $ 0 , respectively, of R&D tax credit reimbursements from Australia.

License Agreement

On October 3, 2017, the Company

entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

(“Xencor”), which discovered and

developed a proprietary biological molecule that inhibits soluble tumor necrosis factor.

On June 10, 2021, the Company and Xencor entered

into a First Amendment to License Agreement pursuant to which, among other things, Section 3.2 of the Xencor License Agreement was amended

to change the due diligence milestones.

Pursuant to the Xencor License Agreement, Xencor granted the Company an exclusive worldwide, royalty-bearing

license in licensed patent rights, licensed know-how and licensed materials (as defined in the license agreement) to make, develop, use,

sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s proprietary protein known as “XPro”

that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants of the licensed protein that specifically

bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients, in any dosage or formulation (“Licensed

On October 3,

2017, the Company entered into a license agreement (“Xencor License Agreement”) with Xencor, Inc.

which discovered and developed a proprietary biological molecule that inhibits soluble tumor necrosis factor.

On June 10, 2021, the Company

and Xencor entered into a First Amendment to License Agreement pursuant to which, among other things, Section 3.2 of the Xencor License

Agreement was amended to change the due diligence milestones.

Pursuant to the Xencor License Agreement, Xencor granted the Company an

exclusive worldwide, royalty-bearing license in licensed patent rights, licensed know-how and licensed materials (as defined in the license

agreement) to make, develop, use, sell and import any pharmaceutical product that comprises, contains, or incorporates Xencor’s

proprietary protein known as “XPro” that inhibits soluble tumor necrosis factor (or all modifications, formulations and variants

of the licensed protein that specifically bind soluble tumor necrosis factor) alone or in combination with one or more active ingredients,

in any dosage or formulation (“Licensed Products”).

The Company believes the protein has numerous medical applications.

Such additional alternative applications of the

technology are available under the Xencor License Agreement.

As part of the purchase price for entering into the Xencor License Agreement,

the Company issued Xencor fully vested warrants to purchase an additional number of shares of common stock equal to 10 % of the fully

diluted company shares immediately following such purchase.

On June 10, 2021, the Company and Xencor entered into an Option Cancellation

Agreement whereby Xencor terminated its warrant to purchase 10 % of the fully diluted shares of the Company in exchange for a cash

payment of $ 15,000,000 and 192,533 shares of the Company’s common stock.

The Company filed a registration statement

covering the resale of these shares during September 2021 and agreed to keep the registration statement continuously effective until all

such shares cease to be outstanding or otherwise cease to be registrable securities as defined in the Option Cancellation Agreement.

additional alternative applications of the technology are available under the Xencor License Agreement.

also agreed to pay Xencor a 5 % royalty on Net Sales of all Licensed Products in a given calendar year, which are payable on a country-by-

2 unchanged sentences

in such country.

In addition, the Company agreed to pay Xencor a percentage of any sublicensing revenue that it receives.

INKmune License Agreement

On October 29, 2015, the Company entered into

an exclusive license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC (“Immune Ventures”).

Pursuant to the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate

any improvements or additions to the patents that may be developed in the future.

In consideration for the patent rights, the Company

agreed to the following milestone payments:

On October 29, 2015, the Company entered into an exclusive

license agreement (the “INKmune License Agreement”) with Immune Ventures, LLC (“Immune Ventures”).

the INKmune License Agreement, the Company was granted exclusive worldwide rights to the patents, including rights to incorporate any

improvements or additions to the patents that may be developed in the future.

In consideration for the patent rights, the Company agreed

to the following milestone payments:

(in thousands)

11 unchanged sentences

The term of the agreement began on October 29, 2015

2015 and ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists,

unless terminated earlier in accordance with the agreement.

and ends on a country-by-country basis on the date of the expiration of the last to expire patent rights where patent rights exists, unless

terminated earlier in accordance with the agreement.

Upon the termination of the agreement, we shall have a fully paid up, perpetual,

3 unchanged sentences

make this payment.

On July 20, 2018, the parties amended the agreement under which the Company was required achieve milestones pursuant

to the agreement.

On October 30, 2020, the parties executed an additional amendment to the agreement under which the Company is required

to achieve the following milestones:

Initiation of Phase II clinical trials or equivalent

by October 29, 2023

Initiation of Phase III clinical trials or equivalent

by October 29, 2025

Filing of NDA or equivalent by October 29, 2026

or equivalent

If the Company doesn’t achieve the above

milestones, it is required to negotiate in good faith with Immune Ventures to determine how it can either remedy the failure or achieve

an alternate development.

If the Company fails to make any required efforts, or if the efforts do not remedy the situation within 60 days

of written notice by Immune Ventures, then Immune Ventures may provide notice to terminate the license or convert it to a non-exclusive

On July 20, 2018 and October 30, 2020, the parties amended the agreement under which the Company was required

achieve milestones pursuant to the agreement.

On April 17, 2023, the parties executed an additional

amendment to the agreement under which the Company removed the milestone achievement requirements to remove the due diligence requirements

to achieve reasonable commercial efforts to bring INKmune to market.

This removed all requirements of clinical trial timelines and the

filing timelines of a NDA or equivalent.

All other provisions in the INKmune License Agreement shall continue in full force and effect.

University of Pittsburg License Agreement

On October 3, 2017, the Company entered into an

Assignment and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh.

Pursuant to the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures assigned all of its rights,

obligations and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth System

of Higher Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

On October 3, 2017, the Company entered into an Assignment

and Assumption Agreement with Immune Ventures related to intellectual property licensed from the University of Pittsburgh.

the Assignment and Assumption Agreement (“Assignment Agreement”), Immune Ventures assigned all of its rights, obligations

and liabilities under an Exclusive License Agreement between the University of Pittsburgh – Of the Commonwealth System of Higher

Education (“Licensor”) and Immune Ventures to INmune Bio (“Licensee”), (the “PITT Agreement”).

Consideration under the PITT Agreement includes:

(i) annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone

Annual maintenance fees under the PITT Agreement

include the following:

annual maintenance fees, (ii) royalty payments based on the sale of products making use of the licensed technology, and (iii) milestone

Annual maintenance fees under the PITT Agreement include

the following:

(in thousands)

2 unchanged sentences

June 26 of each year 2025 until first commercial sale

Upon first commercial sale of a product making

use of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5 % of Net Sales each calendar

Moreover, under the PITT Agreement the Licensee

is required to make milestone payments as follows:

Upon first commercial sale of a product making use

of the licensed technology under the PITT Agreement, the Licensee is required to pay royalties equal to 2.5 % of Net Sales each calendar

Moreover, under the PITT Agreement the Licensee is

required to make milestone payments as follows:

(in thousands)

2 unchanged sentences

First commercial sale of product making use of licensed technology

The Company had no amounts owed pursuant to the

PITT Agreement as of September 30, 2022.

The Company had no amounts owed pursuant to the PITT

Agreement as of March 31, 2023.

The PITT Agreement expires upon the earlier of:

(i) expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement;

expiration of the last claim of the Patent Rights (as defined in the PITT Agreement) forming the subject matter of the PITT Agreement;

or (ii) the date that is 20 years from the effective date of the agreement (June 26, 2037).

The Licensee may terminate the PITT Agreement

upon 3 months prior written notice provided all payments under the license are current.

The Licensor may terminate the PITT Agreement

upon written notice if:

(i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after

receiving written notice;

or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to

the appointment of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

The Licensee may terminate the PITT Agreement upon

3 months prior written notice provided all payments under the license are current.

The Licensor may terminate the PITT Agreement upon

written notice if:

(i) Licensee defaults as to performance of material obligations which have not been cured within 60 days after receiving

written notice;

or (ii) Licensee ceases to carry out its business, becomes bankrupt or insolvent, applies for or consents to the appointment

of a trustee, receiver or liquidator of its assets or seeks relief under any law for the aid of debtors.

NOTE 5 – FAIR VALUE MEASUREMENTS

The following table presents the hierarchy

for assets and liabilities measured at fair value on a recurring basis:

The following table presents the hierarchy for

assets and liabilities measured at fair value on a recurring basis:

(in thousands)

Quoted Price in

Active Market

March 31, 2023:

Cash equivalents

Money market funds

Total cash equivalents

(in thousands)

Observable Inputs

September 30, 2022:

December 31, 2022:

Cash equivalents

1 unchanged sentence

Total cash equivalents

The Company had no assets and liabilities measured

at fair value on a recurring basis as of December 31, 2021.

NOTE 6 – LEASE

In May 2019, the Company signed a sublease agreement

with a related party for office space in La Jolla, California, which served as the former headquarters of the Company.

The lease has a

61 -month term, which corresponds to the lease term of the lessor.

The lessor is CTI Clinical Trial & Consulting Services (“CTI”).

CTI is majority-owned by a member of the Company’s Board of Directors.

During 2021, the Company moved its corporate headquarters

to Boca Raton, Florida.

The Company intended to sublease its office space in La Jolla but was unable to find a tenant.

The Company recorded

a right-of-use asset impairment of $ 89,000 within general and administrative expenses during the nine months ended September 30, 2022

on its La Jolla lease.

In September 2021, the Company signed a lease

with a third party for office space in Boca Raton, Florida.

The lease agreement has a 64 -month term and commenced during the fourth

quarter of 2021.

The Company leases office space in Florida from a

The lease agreement has a 64 -month term and commenced during the fourth quarter of 2021.

Below is a summary of the Company’s right-of-use

1 unchanged sentence

(in thousands, except years and rate)

September 30,

Right-of-use asset (La Jolla lease)

Right-of-use asset (Boca Raton lease)

Operating lease, current liability (La Jolla lease)

Operating lease, current liability (Boca Raton lease)

Long-term operating lease liability (La Jolla lease)

Long-term operating lease liability (Boca Raton lease)

Right-of-use asset

Operating lease, current liability

Long-term operating lease liability

Total lease liability

2 unchanged sentences

NOTE 7 – RELATED PARTY TRANSACTIONS

30, 2022 and December 31, 2021, the Company owed UCL Consultants Limited (“UCL”) $ 8,000 and $ 10,000 , respectively, in connection

with medical research performed on behalf of the Company.

During the nine months ended September 30, 2022 and 2021, the Company paid UCL

$ 486,000 and $ 176,000 , respectively, for medical research performed on behalf of the Company.

At September 30, 2022 and December

31, 2021, the Company recorded $ 123,000 and $ 0 , respectively, of prepaid expenses –

related party for payments made to UCL in advance of services to be provided.

2023 and December 31, 2022, the Company owed UCL Consultants Limited (“UCL”) $ 9,000 in connection with medical research performed

on behalf of the Company.

During the three months ended March 31, 2023 and 2022, the Company paid UCL $ 104,000 and $ 32,000 , respectively,

for medical research performed on behalf of the Company.

At March 31, 2023 and December 31, 2022, the Company recorded $ 35,000

and $ 34,000 , respectively, of prepaid expenses – related party for payments made to UCL in advance

of services to be provided.

UCL is a wholly owned subsidiary of the University of London.

The Company’s Chief Scientific and Manufacturing Officer is a professor at the University of London.

At September 30, 2022 and December 31, 2021, the

Company owed AmplifyBio $ 0 and $ 70,000 , respectively in connection with medical research performed on behalf of the Company.

CEO of AmplifyBio is on the Board of Directors of the Company.

During the nine months ended September 30, 2022 and 2021, the Company paid

AmplifyBio $ 145,000 and $ 0 , respectively, for pre-clinical research performed on behalf of the Company.

The Company’s Chief Scientific and Manufacturing

Officer is a professor at the University of London.

At March 31, 2023 and December 31, 2022, the Company

owed AmplifyBio $ 0 in connection with medical research performed on behalf of the Company.

of AmplifyBio is on the Board of Directors of the Company.

During the three months ended March 31, 2023 and 2022, the Company paid AmplifyBio

$ 6,000 and $ 80,000 , respectively, for pre-clinical research performed on behalf of the Company.

NOTE 8 – DEBT

2021, the Company entered into a Loan and Security Agreement (the “Term Loan”) with Silicon Valley Bank and SVB Innovation

Credit Fund VIII, L.P., together (the “Lenders”).

The Term Loan provides for a $ 15.0 million term loan, of which

the Company borrowed the entire amount on June 10, 2021, and is secured by the Company’s assets.

The Term Loan also provides

for the Company to request an additional $ 5.0 million term loan from the Lenders, which may be granted or denied at the sole discretion

of the Lenders.

loan and debt discount are as follows as of September 30, 2022:

Credit Fund VIII, L.P.

The Term Loan provided for a $ 15.0 million term loan, of which the Company borrowed the entire amount

on June 10, 2021, and is secured by the Company’s assets.

The term loan

and debt discount are as follows as of March 31, 2023:

(in thousands)

debt discount and financing costs, net

1 unchanged sentence

Long-term debt

nine months ended September 30, 2022, the Company recognized interest expense of $ 1,424,000 related to the Term Loan.

three months ended March 31, 2023 and 2022, the Company recognized interest expense of $ 612,000 and $ 435,000 , respectively, related

to the Term Loan.

is required to make interest only payments monthly until July 1, 2023, at which time the Company shall make interest and principal payments

4 unchanged sentences

in effect as reported in The Wall Street Journal plus 4.50 % and (ii) 7.75 %.

At September 30, 2022, the interest rate was 10.75 %.

Loan includes a final payment fee equal to 6.5 % of the original principal amount borrowed payable on the earlier of the repayment

of the loan in full and the maturity date.

The Company has the option to prepay the outstanding balance of the term loans in full,

subject to a prepayment premium of (i) 2 % of the original principal amount borrowed for any prepayment after the first anniversary

and on or before the second anniversary of the loan or (ii) 1 % of the original principal amount borrowed for any prepayment after

the second anniversary of the loan but before the maturity date.

repayment of the $ 15.0 million Term loan principal is as follows as of September 30, 2022:

thousands, except years)

occurrence of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Term

Loan, the breach of certain of its other covenants under the Term Loan, or the occurrence of a material adverse change, the Lenders will

have the right, among other remedies, to declare all principal and interest immediately due and payable, and will have the right to receive

the final payment fee and, if the payment of principal and interest is due prior to maturity, the applicable prepayment fee.

was in compliance with its debt covenants at September 30, 2022.

At March 31, 2023, the interest rate was 12.5 %.

The Term Loan

includes a final payment fee equal to 6.5 % of the original principal amount borrowed payable on the earlier of the repayment of the

loan in full and the maturity date.

The Company has the option to prepay the outstanding balance of the term loans in full, subject

to a prepayment premium of (i) 2% of the original principal amount borrowed for any prepayment after the first anniversary and on

or before the second anniversary of the loan or (ii) 1% of the original principal amount borrowed for any prepayment after the second

anniversary of the loan but before the maturity date.

repayment of the $ 15.0 million Term loan principal is as follows as of March 31, 2023:

(in thousands, except years)

Upon the occurrence

of certain events, including but not limited to the Company’s failure to satisfy its payment obligations under the Term Loan, the

breach of certain of its other covenants under the Term Loan, or the occurrence of a material adverse change, the Lenders will have the

right, among other remedies, to declare all principal and interest immediately due and payable, and will have the right to receive the

final payment fee and, if the payment of principal and interest is due prior to maturity, the applicable prepayment fee.

The Company violated certain non-financial debt covenants as of December 31, 2022 and received a waiver from the Lenders waiving these

debt covenant violations during the three months ended March 31, 2023.

The Company was

in compliance with its debt covenants at March 31, 2023.

NOTE 9 – STOCKHOLDERS’ EQUITY

Common Stock – Issuance to Directors

During the nine months ended September 30, 2022,

directors and officers of the Company purchased 82,900 shares of the Company’s common stock from the Company at

Common Stock – Issuance to Directors and

During the three months ended March 31, 2022, directors

and officers of the Company purchased 82,900 shares of the Company’s common stock from the Company at

$ 8.43 per share (which was the closing price of the Company’s common stock on March 22, 2022) for gross proceeds of

Common Stock – At the Market Offering

nine months ended September 30, 2021, the Company sold 1,439,480 shares of its common stock at an average price of $20.17 per

share under the 2020 ATM program.

The aggregate net proceeds were approximately $28.4 million after BTIG’s commission and other

offering expenses.

nine months ended September 30, 2021, the Company sold 713,192 shares of its common stock at an average price of $21.73 per

share under the 2021 ATM program.

The aggregate net proceeds were approximately $14.9 million after BTIG’s commission and other

offering expenses.

Direct Offering

2021, the Company completed a registered direct offering whereby the Company sold 1,818,182 shares of its common stock to investors

for net proceeds of $ 36.9 million.

of shares to Xencor

10, 2021, the Company and Xencor entered into an Option Cancellation Agreement whereby the Company issued 192,533 shares of

its common stock to Xencor (See Note 4).

Stock options

During the nine months ended September 30, 2022,

the Company granted certain employees and directors options to purchase 819,000 shares of its common stock pursuant to the 2021 Incentive

The stock options had a fair value of approximately $ 5.5 million that was calculated using the Black-Scholes option-pricing

Variables used in the Black-Scholes option-pricing model include:

(1) discount rate of 1.60 % - 3.06 % based on the applicable US

Treasury bill rate (2) expected life of 6.0 – 10.0 years, (3) expected volatility of approximately 105 % - 108 % based on the trading

history of similar companies, and (4) zero expected dividends.

During the three months ended March 31, 2023, the Company granted certain

employees and directors options to purchase 605,000 shares of its common stock pursuant to the 2017, 2019 and 2021 Incentive Stock Plans.

The stock options had a fair value of approximately $ 4.5 million that was calculated using the Black-Scholes option-pricing model.

used in the Black-Scholes option-pricing model include:

(1) discount rate of 3.99 % based on the applicable US Treasury bill rate (2) expected

life of 6.0 years, (3) expected volatility of approximately 91 % based on the trading history of similar companies, and (4) zero expected

The following

table summarizes stock option activity during the nine months ended September 30, 2022:

table summarizes stock option activity during the three months ended March 31, 2023:

(in thousands, except share and per share amounts)

3 unchanged sentences

Options cancelled

Outstanding at September 30, 2022

Exercisable at September 30, 2022

During the nine months ended September 30, 2022

and 2021, the Company recognized stock-based compensation expense of approximately $ 5.4 million and $ 3.3 million, respectively, related

to the vesting of stock options.

As of September 30, 2022, there was approximately $ 13.0 million of total unrecognized compensation cost

related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.17 years.

Outstanding at March 31, 2023

Exercisable at March 31, 2023

During the three months ended March 31, 2023 and

2022, the Company recognized stock-based compensation expense of approximately $ 1.7 million and $ 1.5 million, respectively, related to

the vesting of stock options.

As of March 31, 2023, there was approximately $ 9.8 million of total unrecognized compensation cost related

to non-vested stock options which is expected to be recognized over a weighted-average period of 2.88 years.

issued warrants to the Company’s lenders upon obtaining its loan in June 2021.

1 unchanged sentence

price of $ 14.05 .

At September 30, 2022, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

At March 31, 2023, 45,386 of these warrants are outstanding and the intrinsic value of these warrants is $ 0 .

issued warrants to its placement agents in connection with its February 2019 initial public offering.

1 unchanged sentence

December 19, 2023, and have an exercise price of $ 9.60 .

At September 30, 2022, 28,688 of these warrants are outstanding and the

At March 31, 2023, 28,688 of these warrants are outstanding and the

intrinsic value is $ 0 .

nine months ended September 30, 2022, a third party exercised 19,792 warrants which were issued in 2017 for cash proceeds of approximately

During the three months ended March 31, 2022, a third

party exercised 19,792 warrants for cash proceeds of approximately $ 30,000 .

Stock-based Compensation by Class of Expense

The following summarizes the components of stock-based

compensation expense in the consolidated statements of operations for the three and nine months ended September 30, 2022 and 2021

respectively:

compensation expense in the consolidated statements of operations for the three months ended March 31, 2023 and 2022 respectively:

(in thousands)

September 30,

Research and development

11 unchanged sentences

persons) becomes the beneficial owner of twenty percent or more of the Company’s common stock without the approval of the Board.

Rights Agreement was scheduled to expire on December 30, 2021 but was extended until December 30, 2022 by the Board.

Rights Agreement shall expire on December 30, 2023.

NOTE 10 – COLLABORATIVE AGREEMENTS

During 2020, the Company was awarded a $0.5 million

grant from the Amyotrophic Lateral Sclerosis (“ALS”) Association to fund a study of the efficacy of XPro1595 to reverse ALS

in vitro and to fund a study of the efficacy of XPro1595 to protect against ALS model phenotypes in vivo.

During the nine months ended

September 30, 2022 and 2021, the Company received $ 0.0 million and $ 0.1 million, respectively, of cash proceeds pursuant to this grant

which the Company recorded as deferred liabilities.

The Company offsets costs incurred related to this research against the grants.

of September 30, 2022 and December 31, 2021, the Company recorded approximately $ 0.1 million and $ 0.3 million, respectively, as deferred

liabilities in the consolidated balance sheet related to the ALS grant.

During September 2020, the Company was awarded

a grant of up to $2.9 million from the National Institutes of Health (“NIH”).

The grant will support a Phase 2 study of XPro1595

in patients with treatment resistant depression.

As of September 30, 2022, the Company has not received any proceeds pursuant to this

During September 2020, the Company was awarded a grant

of up to $2.9 million from the National Institutes of Health (“NIH”).

The grant will support a Phase 2 study of XPro1595 in

patients with treatment resistant depression.

As of March 31, 2023, the Company has not received any proceeds pursuant to this grant.

NOTE 11 – COMMITMENTS

the Company signed a sublease agreement with a related party for office space in La Jolla, California.

The lease has a 61-month term,

which corresponds to the lease term of the lessor.

The lessor is CTI.

During September

4 unchanged sentences

to the leases are as follows:

(in thousands,

except years)

(in thousands, except years)

Total lease payments

3 unchanged sentences

Long-term operating lease liabilities

During the nine months ended September 30, 2022

and 2021, the Company recognized $ 162,000 and $ 45,000 , respectively, in operating lease expense, which is included in general and administrative

During the three months ended March 31, 2023 and 2022,

the Company recognized $ 43,000 and $ 54,000 , respectively, in operating lease expense, which is included in general and administrative

expenses in the Company’s consolidated statement of operations.

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements